BILL ANALYSIS
AB 730
Page 1
GOVERNOR'S VETO
AB 730 (De La Torre)
As Amended August 18, 2009
2/3 vote
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|ASSEMBLY: |53-23|(May 28, 2009) |SENATE: |22-16|(September 3, |
| | | | | |2009) |
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|ASSEMBLY: |51-25|(September 9, | | | |
| | |2009) | | | |
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Original Committee Reference: HEALTH
SUMMARY : Increases the maximum civil penalty for health
insurance post-claims underwriting from $118 per violation to
$5,000 per violation for insurers under the jurisdiction of the
Commissioner of the California Department of Insurance (CDI).
Specifically, this bill :
1)Increases the maximum civil penalty for each act of
post-claims underwriting, as prohibited in the Insurance Code,
from $118 to a maximum of $5,000 for each act, and up to
$10,000 for each act or violation where the health insurer
knew or had reason to know that the act was unlawful.
2)Requires that the first $118 of each penalty collected for
post-claims underwriting violations be deposited in the
General Fund and the balance of any penalty revenue be
deposited in the Major Risk Medical Insurance Fund to be used,
upon appropriation by the Legislature, for the Major Risk
Medical Insurance Program (MRMIP).
3)Requires civil penalties and disciplinary actions imposed
against insurers for specified violations of the Insurance
Code, including post-claims underwriting violations, to be
determined at a hearing conducted in accordance with the
AB 730
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Administrative Procedures Act.
The Senate amendments :
1)Make the increased penalties in this bill a civil penalty in
lieu of the $118 civil penalty for violations of the Insurance
Code.
2)Require that the first $118 of each penalty collected for
post-claims underwriting violations be deposited in the
General Fund and the balance of any penalty revenue be
deposited in the Major Risk Medical Insurance Fund to be used
upon appropriation by the Legislature for MRMIP.
AS PASSED BY THE ASSEMBLY , this bill was substantially similar
to the version passed by the Senate.
FISCAL EFFECT : According to the Senate Appropriations
Committee, costs to CDI to continue to assess penalties for
post-claims underwriting in accordance with this bill would be
minor and absorbable. To the extent that insurers practice
post-claims underwriting and CDI collects penalties, there would
be unknown, increased revenue for MRMIP.
GOVERNOR'S VETO MESSAGE :
"This bill attempts to align enforcement provisions between the
Department of Managed Health Care and the California Department
of Insurance. However, it does not create this much-needed
consistency, but instead continues to subject regulated entities
to differing standards.
"In addition, while I believe the Managed Risk Medical Insurance
Program to be a possible and appropriate location for some of
the penalties associated with these fines, I cannot support
provisions that further limit revenue to the General Fund and
decrease the state's ability to direct resources to its highest
priorities."
AB 730
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Analysis Prepared by: Marjorie Swartz / HEALTH / (916)
319-2097
FN: 0003412